RBA holds cash rate at 3.60% in September

All nine board members voted to keep the cash rate unchanged on Tuesday. 

"Financial conditions have eased since the beginning of the year and this seems to be having some impact, but it will take some time to see the full effects of earlier cash rate reductions," the board's post-meeting statement reads.

"The board judged that it was appropriate to remain cautious, updating its view of the outlook as the data evolve."

In a media conference on Tuesday afternoon, governor Michele Bullock said, "it was a good decision today to hold".

"We felt that, given the evidence we have, the risks were reasonable balanced ... there’s been a bit of an upside surprise on some of the data, the inflation and the activity data.

"That's good news – it's good news that activity is responding [to rate previous cuts].

"We'll have more information available in November ... we'll make that decision in November about whether [the cash rate will move] down again, or maybe [it will be a] hold again, and if the economy is continuing to recover that’s really good news."

While the central bank's September meeting had long been tipped to result in a hold, expectations for the upcoming meeting have shifted recently.

Cash rate on ice: Will it thaw in November?

A surprise uptick in inflation in August led many experts, including those at NAB, to reassess their forecasts for the November meeting, to be held over 3 and 4 November.

Consumer prices rose 3% over the year to August, according to the ABS's monthly CPI indicator – slightly above forecasts.

The jump has some economists warning the next quarterly read might also come in hotter than expected.

Even the RBA board appeared to allude to the findings, with today's statement reading, "recent data, while partial and volatile, suggest that inflation in the September quarter may be higher than expected at the time of the August Statement on Monetary Policy."

The RBA puts more weight on the quarterly inflation report, which considers a broader range of goods and services and is seen to be more reliable.

In the June quarter, its preferred measure – the trimmed mean – came in at 2.7%, comfortably inside the RBA's 2% to 3% target band.

If the September quarter result (due in late October) comes in stronger, it could delay the cut that markets and banks were widely expecting in November.

Market pricing now suggests less than a 50% chance of a rate cut in November, with a full 25 basis point drop not expected until early 2026.

NAB economists are even less optimistic about future cuts, predicting the cash rate will plateau between now and May 2026.

Those at CommBank, ANZ, and Westpac still predict a November cut, but such forecasts generally hinge on the upcoming quarterly inflation read – due in late October.

Westpac is the most optimistic when it comes to rate cuts, suggesting variable rate borrowers might realise savings in November, February 2026, and May 2026.

Home loan borrowers warned not to bet on rate cuts

The Finance Brokers Association of Australia (FBAA) has urged mortgage holders not to rely on imminent cuts.

"There are still many borrowers doing it tough and seeking more rate relief … they should know there are alternatives [to RBA rate cuts], FBAA managing director Peter White said.

Mr White advises struggling borrowers to reach out to their lender to ask for a rate reduction and if rejected, consider refinancing to a more competitive home loan, perhaps with the help of a mortgage broker.

"Brokers are legally obligated to act in the best interests of their customers so you can be assured that you will receive the best guidance."

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